Barneys New York has found a new parent in Dubai.

Jones Apparel ( JNY) announced late Friday a much-expected deal to sell the upscale chain to Istithmar, a private-equity firm owned by the Dubai government, for $825 million in cash.

"We are very pleased to enter into this transaction, which realizes significant value for our investment in Barneys and provides us with the opportunity to use the net proceeds to enhance shareholder value," said Jones Apparel President and CEO Peter Boneparth. "Furthermore, going forward, because the sale will reduce the level of required capital expenditures we will have greater financial flexibility in the execution of our business strategy."

Jones, which owns fashion brands like Norton McNaughton, Jones New York and Nine West, bought Barneys in 2004. The move to sell the chain comes as the company deals with a sagging stock price and a tepid consumer response to many of its much more moderately priced retail chains. Jones said last month that it plans to exit some of its moderate product lines by the end of the year.

The company said it is evaluating the use of Barneys sale proceeds, which are estimated at $770 million. Among its options are repaying debt and returning capital to shareholders, Jones said.

The company is allowed to evaluate potential rival offers for Barneys. The deal would require a third-party proposal to be made by July 22.

If Jones terminates the Istithmar deal before that date, it will have to pay a $20.6 million fee. The termination fee jumps to $22.7 million if Jones pulls out of the deal after July 22.